The Principal-Agent Problem: Tasks

Tasks

There are three possible tasks outlined below. You can choose one of these tasks and do some research into possible answers to them or you can have a go at all three! You can produce your answer/s in the form of a written submission or you can work as a group in your class and each take one of the tasks and do a presentation based around each task.

1. One topical question that comes up regularly in Economics A' level papers is that of tradable permits. Tradable permits have been one method proposed to try and reduce the level of pollution.
   Please read this 'In the News' article, which appeared in May 2006. Consider the relevance of the principal agent problem to the market for carbon trading permits.
2. To what extent would you consider the setting up of bodies such as the Social Science Inspectorate and Ofsted an appropriate and effective solution to the principal agent problem in the education and health markets in the UK?
3. The United States has a greater emphasis on private medical insurance in its health care provision than the UK. Using the principal agent problem, assess the advantages and disadvantages of private medical insurance in meeting the health care needs of citizens in a country like the US.